Are the advantages of leasing versus owning that great?
If you own a food processing and packaging plant, you are probably interested to know the answer to those two questions. We are going to give you the low down on leasing versus buying that equipment.
Advantages of leasing
There are several advantages to leasing equipment that you do not have with purchased equipment, check out some of the tips for small business owners.
Some of those advantages include:
- You have more flexibility with your capital cash to do other things that the company needs.
- Tax advantages for leasing that owning does not receive.
- Leasing is more affordable; the monthly payments are lower than purchasing.
- Fixed payments with leasing, unlike bank loans that use variable interest rates that can change over the term of the loan.
- The equipment value is in its use, not ownership.
- With leasing, the sales tax is paid overtime, not upfront at the time of sale.
- Your equipment will always be up to date instead of needing updating, and with inflation, on the rise, it is crucial you not break the bank updating your equipment.
- Lower down payments than financing to own.
- Leasing allows you to keep current with new packaging trends that can move away from plastic to materials that are biodegradable.
There are more advantages to leasing your equipment than owning it. A significant advantage is that your equipment will always be up to date. And you will not have to wait to sell your old equipment.
The latest trend in food processing and packaging
Leasing has become the latest trend in many industries. But especially in food processing and packaging and many other types of manufacturing businesses. According to Food Processing Magazine, equipment is leased by private investors to companies. The equipment that private investors lease is manufactured in Europe and leased in North America. The same article explains that robotics is also becoming a trend. Even in the food processing and packaging industry. One place that robotics are in high use is palletizing. It is affordable to even mid-sized operations. It basically combines case packing and palletizing with robotic palletizers.
Types of food processing and packing equipment for lease
There are many processes that you can lease equipment for in the food processing and packaging industry.
Some of these processes include the following:
- Size reduction or enlargement
- Food packing materials
- Material handling
- Product distribution
The types of equipment are:
- Soak/flotation tanks
- Spray washing
- Agitated tanks
- Paddle mixers
- Anchor mixers
- Non-thermal extruders
- Single-screw extruders
- Twin-screw extruders
- Refrigerated extruders
- Seamers for sealing cans
- Form-fill-seal systems for sealing flexible film
Those are just some of the equipment types that can be leased. The list is too long to print here. As you can see from that long list, your business would be financially broke if you were to purchase all that equipment. However, leasing the equipment saves your working capital, provides tax breaks, and you can upgrade your equipment with ease as the need arises.
Industries that use leased equipment
There are many industries that use leased equipment. When it comes to food and beverage, here are a few of those companies:
- Alcoholic beverages
- Bakery and confectionery products
- Dairy – milk, yogurt, sour cream, and cheese
- Fish and seafood
- General food products such as cereals, flour, sugar, pasta, and more.
- Meat and poultry
- Soda, water, tea, juices that are not alcoholic
There are many food processing and packaging companies that lease their equipment. But, they are not the only industry to rent equipment. Leasing equipment is truly an excellent choice. You never have to worry about depreciation on the equipment. You can take advantage of the lease being an expense and not assets on your tax filings. Above that, the most significant advantage is that you can upgrade your equipment as newer, more innovative equipment becomes available. You will have your capital to spend on other business needs and expansion. All those reasons are why you would want to lease the equipment for your food processing and packaging plant.